Bankruptcy overhaul mooted

[Topher Bear]

Bankruptcy may well be a difficult cross to bear,

but trying to live your life with a 20K debt and little or no assets is also extremely difficult, especially if you plan to move abroad!

Its a question of the lesser of two evils....and only experience will tell you which was the correct path.

Bringing the convo back to house prices...most of joe public will not understand the "forever" stigma attached to bankruptcy and may well see the "clear in a year" statements and go for it...which means those companies with which they have the biggest loans will suffer most...ie mortgage lending companies.

The default insurance these companies have a based on an idea of what they believe will be the level of defaults...but if the economy changes and many many more people declare bankruptcy in quick succession then these companies really will still suffer.

As for the costs going onto borrowing...I don't reckon they stick it just to borrowing costs, they probably end up keeping savings rates down too! So we do all suffer of course.

Thinking about those maybe most likley to go the Banruptcy route these days are perhaps new graduates saddled with huge student loans (which are also huge millstones around their necks when it comes to financial matters)...now of course these people will not have mortgages, so the big loser will be the student loan company, ie the government, ie US when a big hole appears in the books when students no are no longer paying back their loans...higher taxes...more pressure on home owners...more likely to default on mortgages...so it will just take a little longer to feed through the system!

Topher Bear